Accounting professor highlights biggest take-aways from financial assistance bill, including rebate checks

The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act will be a "financial lifeline" for individuals and small businesses owners deeply affected by COVID-19, said a GVSU faculty member.

Chris Harper, clinical affiliate faculty of accounting in the Seidman College of Business, said the postponement to July 15 for filing and paying federal and State of Michigan taxes will be a huge help.

He said individuals who qualify for an income-based rebate payment ($1,200 per person and $500 for qualifying dependents) may want to pay attention to the timing of filing their 2019 returns.

"If your income level in 2018 was low enough to qualify for a full rebate payment, but your income increased in 2019, you may want to delay filing," Harper explained. "Otherwise, you may receive a reduced or limited rebate."

He said taxpayers with 2018 incomes high enough to reduce or eliminate the stimulus payment may want to file their 2019 federal income tax returns promptly if a lower 2019 income will result in a larger stimulus payment.

Harper said rebate payments could arrive in the mail or in bank accounts in as little as three weeks.

The CARES Act also includes many provisions for small businesses. Harper said business owners should contact their commercial lenders as soon as possible to inquire about the Paycheck Protection Program, which may permit low-interest loans offered through the Small Business Association.

"These loans will serve as a lifeline for many companies, like movie theaters, gyms and so many other businesses that can't operate right now," said Harper. "There is the potential that these loans could be partially forgiven."

Harper added a note about retirement plans. He said the 10 percent penalty for early withdrawal from retirement plans, (IRA, 401k) will not apply to withdrawals that are for COVID-19-related purposes. "You can also avoid taxation if you recontribute the amount within three years," he said.

There are many details and moving pieces as federal, state and local governments respond to evolving circumstances. Harper cautions taxpayers that this is general advice. Taxpayers should seek counsel from their CPA, attorney or other professional advisor. 

More information about the CARES Act.